Spending squeeze threatens Coast Guard fleet modernization

Oct. 13, 2013 - 04:37PM
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The Waesche, the second U.S. Coast Guard national security cutter, demonstrates maneuvers at the end of its acceptance trials. Tight budgets threaten the service's fleet modernization plans. (U.S. Coast Guard)

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More than a decade after awarding the first contract to modernize its aging fleet, the U.S. Coast Guard is making headway: A fourth national security cutter was launched in August and the keel was laid for a fifth this May, around the same time the agency awarded a production contract for the sixth.

But tension is building as the service struggles to mesh the most ambitious shipbuilding plan in its history with tightening budgets. Two years ago, the Government Accountability Office called the modernization plan “unachievable” and urged the service to retrench.

The Coast Guard has been holding fast to its game plan, but after touting the service’s progress, Adm. Robert Papp, the Coast Guard’s commandant, acknowledged in May the risk of a “death spiral.”

Under the Obama administration’s proposed 2014 budget, the agency would receive about $743 million — almost a one-third cut from 2013 — for new ship procurement. The request drops preliminary funding for the last of eight new national security cutters and provides little money for a needed icebreaker, according to data provided by congressional researchers.

“If we’re going to stay with our program of record, things that have been documented that we need for our service, we’re going to have to just stretch everything out to the right,” Papp said at a Senate appropriations subcommittee hearing.

“Plus, it almost creates a death spiral for the Coast Guard because we are forced to sustain older assets — older ships and older aircraft — which ultimately cost us more money, so it eats into our operating funds, as well, as we try to sustain these older things,” Papp added.

Although the Senate panel later recommended a substantial increase in the 2014 shipbuilding account over the administration’s request, that plan has not been passed by the full Senate. Once the partial government shutdown ends, the Coast Guard likely will face a stop-gap continuing resolution that will cloud its 2014 funding outlook, at least temporarily. Another round of sequester-related cuts could hit in January.

Although Papp has said the agency needs about $2.5 billion annually for modernization, it has instead been receiving anywhere from one-third to one-half that amount, Brian Slattery, a research assistant at the Heritage Foundation, a conservative think tank, said in an interview last week.

“This is so shortsighted,” Rep. Frank LoBiondo, R-N.J., said at a House subcommittee hearing earlier this year, contrasting the cuts in shipbuilding money with a congressional decision to funnel billions of dollars to the Afghan military and police.

“Do we not remember what happened on Sept. 11? These few dollars extra we could use for the Coast Guard to be prepared. This is absurd.”

In all, the Coast Guard wants to buy 91 ships over the next two decades or so; aircraft replacements and other equipment upgrades also are part of the mix.

The new cutters, like the vessels they are supposed to replace, would be used for search and rescue, coastal patrols and other operations. The centerpiece would be the eight national security cutters, 418-foot vessels with automated weapon systems and secure communications that can stay at sea for up to three months.

Much smaller and cheaper would be the 58 fast response cutters, with about one-fourth the range and a cruising limit of five days.

Rounding out the new fleet would be 25 offshore patrol cutters that would rank between the other two ship classes in size and price; the Coast Guard is still developing the specifications.

The total projected price exceeds $21 billion, more than one-third higher than a 2007 estimate. The Coast Guard is already building national security and fast response cutters. Production of the offshore patrol cutter is set to start in 2017.

Financial shortfalls are also slowing production of the fast response cutters. So far, just seven have been delivered while another half-dozen were ordered last month.

Earlier, the Coast Guard’s eagerness to steam ahead led it to start building the fast response cutters before dealing with design and technical risks, the Department of Homeland Security’s inspector general said in a 2011 report. As a result, six ships needed rework, delaying the construction schedule by at least nine months and adding almost $7 million to the overall cost, the audit said.

The problems may not end there, the inspector general added. Because the Coast Guard went ahead with the buys before testing the lead ship in “actual operations,” it is unclear how well the cutter will perform at sea. If defects turn up, additional “costly rework and delays” could be needed, or the Coast Guard may have to accept ships that don’t meet mission requirements, the report said.

In a written response to the findings, Coast Guard officials said they gave the first ship an operational assessment in February and otherwise followed existing acquisition policies. The officials agreed, however, to consider whether any changes are needed to those policies.

The elimination of long-lead funding for the final national security cutter from this fiscal year’s budget saves money in the short term, but at the expense of causing potential cost overruns in future years and delaying the ship by as much as a year, according to Vice Adm. John Currier, Coast Guard vice commandant.

Decisions to cut the number of smaller fast response cutters will also reduce economies of scale and eventually cost the service more.

The final national security cutter is fully funded in the service’s five-year plan, according to the Department of Homeland Security, which oversees the Coast Guard.

The service had planned to buy six fast response cutters this fiscal year, but due to budget pressures, it requested just two.

Currier told lawmakers that the weakest link in the Coast Guard’s capabilities is its offshore fleet because the older ships are far less capable and more difficult to maintain.

“The current budget demands of us tough choices,” he told the subcommittee, “As we are under fiscal duress like everyone else is in the federal government we are going to make triage like choices to go to the area of highest risk and spend the critical capital that we receive.”